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The European Project: the future of the EU.

Nothing much happened in 1975 in productivity per hour, the gap remained small. I maintain my opinion that the real divergence point is 1994/5, as the authors of the piece also state.

Lowering real wages cam be a cause of loss of labour productivity? Why? Because with lower wages there is less incentive to invest in productivity! At the very least it feeds into a vicious cycle.

Consider the values for productivity: the gap was, in rough numbers, (32-28)/28 in 1995, versus (16-14)/16 in 1975, roughly. That's 14% and 12%. In terms of productivity the gap was stable. The result is naturally that the gap in GDP per person also remained stable. After 1975 Italy ceased closing that gap, but neither did it widen. Until the mid-90s, when it embarked in the Euro project.

Italy became less attractive for investors when occupation of Eastern Europe ended. Italy wasnt able to solve difference from south and north for the century, its quite unfair blame EU now. We can perhaps blame EURO, but do not forget that inflation of Lira was one of reasons why people were so attracted. Who would solve Italian problem will get Nobel prize.

Less regulations better economy is not a rocket science. My mom now needs to spend every day a hour of work because GDPR instead programming something useful for the company. These regulations of course give some people jobs, but communist hotel fridge openers made more values for society than these.

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Italian inflation was stable, it was easy enough to manage. Prices went up, wages went up, and so on, it doesn't matter if it it 10% instead of 2% so long as it is reasonably predictable. There was not that much pressure at the time to embark on a single currency project.

Less regulation = better is not necessarily true. It all depends on the regulation. If regulation is meant to enable some form of rent extraction at some stage, it will be bad.

Italian inflation was stable, it was easy enough to manage. Prices went up, wages went up, and so on, it doesn't matter if it it 10% instead of 2% so long as it is reasonably predictable. There was not that much pressure at the time to embark on a single currency project.

Less regulation = better is not necessarily true. It all depends on the regulation. If regulation is meant to enable some form of rent extraction at some stage, it will be bad.

Click to expand...

For simple folk like me it was sign of cheapness. I remember how we poor eastern europeans felt like millionaries in Italy, even when we were spending our month earnings (Italy was only affordable destination while Balkan was in war, I was in Italy 3 times as small child). Its psychological aspect, something whats overlooked but sometimes has more impact on economy than calculations. Now is Italy for us expensive and more popular destination are countries like Croatia or countries overseas.

Regards regulations, I see some potential for good. Its just rare. I do not propagate libertarianism, these guys seem to me antisocial *******s for most of time. But in EU and in my country (yes we are not a victim, we are an accomplice) I really see unrecessary regulations, regulations just for regulations. The expecting other law which would limit your freedom, take your free time and suck your vallet is unfortunately something becoming more and more associated with EU.

It‘s just silly, all that energy is wasted on figuring out which product should cost now what. In the whole logistics chain. I pity the guys who have to figure out the exact product numbers and write the laws and documents. That must be boring and completely pointless job to do. All the while Trump sits in front of his TV, tweets and just says „do it“ without having the faintest clue on what a huge machine his words start.

Even worse, the next administration will just need quite a lot of time to just clean up the mess before they can move on...

Dude, the US Federal Reserve controls interbank clearing. Do you understand what that means?

This is correct, because of how exposed European banks were to the US mortgage-backed securities market.

To be clear: all the major US banks were in a position of insolvency not very long into the crisis. Under existing US law the government could have taken them into receivership to resolve them: essentially, a temporary nationalization while the government decided which of the bank's creditors would take a haircut. Obama chose not to do this instead infamously promising bankers that he would stand between them and the public's "torches and pitchforks."

What is not entirely clear to me is whether this was a cynical ploy by Obama and he knew what he was doing, or whether he simply did not understand what was going on and was basically deceived by the likes of Larry Summers, Tim Geithner, and Ben Bernanke. Either way it is hugely disappointing.

EDIT:
I'll help you with the answer:
The typical top financial indicator in that article, shown first, is GDP per Capita:
And that one does indeed converges up to 1992.
(GDP per Capita is a following indicator)View attachment 522523

So let's go back in time and look at an leading indicator the Labor Productivity in Euro/hr in manufacturing:
And look what happens long before the Euro between 1970 and 1983 (an important moment for France).
You can see that the Labor Productivity diverges directly from 1970, but the difference stabilises around 1975.View attachment 522524
What happens in 1975 ?
You can see in this graph below, the Real Wage per hour of manufacturing, still from that same article of you, that in 1975 the real wage goes down and is kept at a slower decrease as the Euro-4 countries until 1982.
This is a real leading indicator, and a big brute force help to protect your domestic industry and increase your export. During that period of 1975-1982 the diff in labor productivity stops increasing (Fig 4 above). And all the time the GDP per Capita is catching up with France in the first graph Fig 1.View attachment 522526

All in all for that period 1970-1983:
* the economy of Italy is steadily losing labor productivity since 1970 compared to NW EU: the root diverge coming from the kind of industry and country setting.
* the counter measure is lower real wages in 1975
* This stabilises the diverge in labor productivity
* All this time the GDP per Capita is increasing
* Italy has manoeuvered itself in a cheap labor industry country position by 1982 for manufacturing.
* Italy can still benefit from that cheap profile for many years, the GDP per Capita going up, but was not able to get it's industry to higher value goods.

Back to my question at the start of this post.

That converging you mentioned... was that only related to that following indicator GDP per Capita ?

Nothing much happened in 1975 in productivity per hour, the gap remained small. I maintain my opinion that the real divergence point is 1994/5, as the authors of the piece also state.

Lowering real wages cam be a cause of loss of labour productivity? Why? Because with lower wages there is less incentive to invest in productivity! At the very least it feeds into a vicious cycle.

Consider the values for productivity: the gap was, in rough numbers, (32-28)/28 in 1995, versus (16-14)/16 in 1975, roughly. That's 14% and 12%. In terms of productivity the gap was stable. The result is naturally that the gap in GDP per person also remained stable. After 1975 Italy ceased closing that gap, but neither did it widen. Until the mid-90s, when it embarked in the Euro project.

Italian inflation was stable, it was easy enough to manage. Prices went up, wages went up, and so on, it doesn't matter if it it 10% instead of 2% so long as it is reasonably predictable. There was not that much pressure at the time to embark on a single currency project.

Less regulation = better is not necessarily true. It all depends on the regulation. If regulation is meant to enable some form of rent extraction at some stage, it will be bad.

For simple folk like me it was sign of cheapness. I remember how we poor eastern europeans felt like millionaries in Italy, even when we were spending our month earnings (Italy was only affordable destination while Balkan was in war, I was in Italy 3 times as small child). Its psychological aspect, something whats overlooked but sometimes has more impact on economy than calculations. Now is Italy for us expensive and more popular destination are countries like Croatia or countries overseas.

Regards regulations, I see some potential for good. Its just rare. I do not propagate libertarianism, these guys seem to me antisocial *******s for most of time. But in EU and in my country (yes we are not a victim, we are an accomplice) I really see unrecessary regulations, regulations just for regulations. The expecting other law which would limit your freedom, take your free time and suck your vallet is unfortunately something becoming more and more associated with EU.

Click to expand...

I have no idea whether or not this is related to the crisis in Italy - but nowadays, I won't discount it - but Google has, as of the last several days, stopped translating Italian language sites and articles online to English entirely. It just gives an "Error 404: Your request is either invalid or illegal. That is all that is known" message with the cartoon Google maintainence robot icon.

Meanwhile, one of the principal reasons why the government budget was always in deficit was that ‘the Greek economy had become a massive exercise in tax evasion’. It was said that not paying your taxes had become ‘a way of life for middle-class Greeks’. One example of this delinquency which acquired an almost legendary status was the case of the swimming pools of Ekali, a prosperous suburb to the north of Athens. In the municipality of Athens, a permit was required to own a pool. Such a permit could cost up to 5,000 euros a year, and so the affluent residents of Ekali simply refused to pay. It was alleged that only 324 people checked the box on their annual return, while later satellite evidence revealed nearly 17,000 swimming pools. This implied an evasion rate of 98 per cent

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it's the prospects of the imminent oil sheikdom . That Greeks want 300 billions of Euros so that like they won't pay back the money back . Kinda unfair for me to be involved , as the Greeks were like "unjustly" sat upon as they had to remain teethless while Democracy was coming to Turkey and nobody should have felt a need for an Army . Would have posted in a more relevant thread but my searching is always a mess .

will be ignored by the order of mods .
told ya ı was here for the game .

short term signature change for a reminder
we will scorn US into oblivion .

it's the prospects of the imminent oil sheikdom . That Greeks want 300 billions of Euros so that like they won't pay back the money back . Kinda unfair for me to be involved , as the Greeks were like "unjustly" sat upon as they had to remain teethless while Democracy was coming to Turkey and nobody should have felt a need for an Army . Would have posted in a more relevant thread but my searching is always a mess .

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Kind of a silly idea to tax swimming pools.
And 5,000 Euro per year does not seem fair to me.
Perhaps a unicorn to make a govt budget look better on paper than it could be, evading for another year the real tax issues to address.
If you want to address black informal money, there are better ways to use your tax system.

I live in a "museum" of agriculture and since 1956 in a continuous "EU crisis"."It is better to be a human being dissatisfied than a pig satisfied; better to be Socrates dissatisfied than a fool satisfied."

all about sterotypes , that the sunny Med people do not like to work but skim off those who do . Would have better suited a Greek crisis thread . And of course Tsipras the oil sheik to be will discover them Europeans and Europeans will be remind him of this when Tsipras calls on the Christian World when we are about to take back the islands -given for a false promise of EU ascension .

will be ignored by the order of mods .
told ya ı was here for the game .

short term signature change for a reminder
we will scorn US into oblivion .

all about sterotypes , that the sunny Med people do not like to work but skim off those who do . Would have better suited a Greek crisis thread . And of course Tsipras the oil sheik to be will discover them Europeans and Europeans will be remind him of this when Tsipras calls on the Christian World when we are about to take back the islands -given for a false promise of EU ascension .

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That stereotypes.
You cannot talk about a nice sand beach if you must restrict yourself to the singular grains of sand
Anyway I never said anything ever about Med people being lazy, though I only know Italy and to some lesser degree Turkey good enough to really say something about that from my own experiences.

From the recorded statistics (Penn tables):
Germany, France, Belgium, etc people work on average around 1,500 hours per year.
South Europe roughly around 1,750 hour a year like many countries in the world (like US, UK, Japan) with Turkey just north of 1,800 and Greece on average just above 2,000 hours a year.

But having an effective tax system, get it transparent, get it relatively resistant against all kinds of abuses, get it well balanced between local and national, has to overcome many resilient defenses. Not easy if you come from a strong informal economy tradition with an abundancy of civil servants keeping themselves employed.

I live in a "museum" of agriculture and since 1956 in a continuous "EU crisis"."It is better to be a human being dissatisfied than a pig satisfied; better to be Socrates dissatisfied than a fool satisfied."

Recall not only the disgusting "piigs" idiocy a few years back, but also that many northern europeans are stuck in that line. And sadly we are stuck with them, for the time being.

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I think most people in most rich countries have the wrong picture about why their prosperity is high.

But I am afraid thaty the opposite is also true:
most people in less rich countries have the wrong picture about the reasons why.

I live in a "museum" of agriculture and since 1956 in a continuous "EU crisis"."It is better to be a human being dissatisfied than a pig satisfied; better to be Socrates dissatisfied than a fool satisfied."

South Europe roughly around 1,750 hour a year like many countries in the world (like US, UK, Japan) with Turkey just north of 1,800 and Greece on average just above 2,000 hours a year.

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Oh, my. I knew the working class among my Southern neighbours in the U.S. were being overworked (and underpaid and undercompensated) on average by their corrupt, greedy, unaccountable corporate masters who control their government through lobbying groups to ignore their own constituents and kowtow to the plutocratic oligarchy - but I didn't know the "New Planters" were working them as long hours, on average, as the infamous "live-to-work, not work-to-live" Japanese hours of labour.

Oh, my. I knew the working class among my Southern neighbours in the U.S. were being overworked (and underpaid and undercompensated) on average by their corrupt, greedy, unaccountable corporate masters who control their government through lobbying groups to ignore their own constituents and kowtow to the plutocratic oligarchy - but I didn't know the "New Planters" were working them as long hours, on average, as the infamous "live-to-work, not work-to-live" Japanese hours of labour.

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1800 hours is 45 weeks per year, at 40 hours a week. Even with ~week off for Christmas (many places of employment give nowhere near this!) and ~day off per 2 week pay period cycle a 40 hr/week job breaks above 1800 hours.

However the figures he gives are "average". So folks with part time employment will rapidly drag it down, while those with 60+ hour weeks will bring it up. I *think* there are far more part timers than those that go far beyond standard full time, so the averages are misleading.

Similar averages might have pretty different typical experiences for a full type employee, though those numbers all seem kind of low to me other than Greece when I do the math. Must be the part time stuff, I would love to have ~7 weeks off for one reason or another per year but it doesn't happen, nor is it close, for any full time employee I know.

Similar averages might have pretty different typical experiences for a full type employee, though those numbers all seem kind of low to me other than Greece when I do the math. Must be the part time stuff, I would love to have ~7 weeks off for one reason or another per year but it doesn't happen, nor is it close, for any full time employee I know.

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I actually have 8 weeks off per year. That might explain, why Germany is at the bottom at the list, although with a much lower number of hours than I work.

However the figures he gives are "average". So folks with part time employment will rapidly drag it down, while those with 60+ hour weeks will bring it up. I *think* there are far more part timers than those that go far beyond standard full time, so the averages are misleading.

Click to expand...

I am not sure how the average is calculated or what it is supposed to mean. For example, how is unemployment factored in? If I were to employ someone for 10 hours a week who has been unemployed before, does this make the value go up or down? Not to mention that time spent working doesn't tell much about the result of that work.

the term lazy is also applicable to other things , like getting others to fight your wars . There is this new claim that 92 000 sq kms of sea has been turned over to the Greeks with 5 more islands . Can't say the islands are not already amongst the 18 or 19 already given . We are like flooded with news of how New Turkey defends the interests of the country , like having hydrocarbon wells to justify acting like Arab Goverments and that 92 000 away so that the Greeks can have their own wells ? To cover that the same sources then quote old treaties which stipulate three fourths of Crete belongs to people other then Greeks , and you would know who , their nation name starts with a T and they are just barbarians , with those 15 or so islands around the same . We will not worry with smallprint and clear all the way to Gibraltar , put all those brilliant Italian Right Wingers into Med so that they too have a taste of the beauties of the sea all those loser immigrants enjoy and what not . And then Tsipras will call for a Crusade and them Europeans will all remember Ekali .

will be ignored by the order of mods .
told ya ı was here for the game .

short term signature change for a reminder
we will scorn US into oblivion .

in this case , ı must really argue it's laziness . Considering my entire adult life has seen a very strong narrative that we should be erased fromthe face of Earth and everything proved time after time and in the end nothing happenz .

will be ignored by the order of mods .
told ya ı was here for the game .

short term signature change for a reminder
we will scorn US into oblivion .

Perhaps this is kind of a rant on Macron.
I really do not understand this man. Actually I have a real bad feeling about him. He is coming out of nowhere, finds the 20 million to pay his election campaign (and NOT from normal crowdfunding) and the word "reform" is pre-progammed on his lips, for everything.

Anyway... this article shows how he entangles the EU in domestic French affairs, somewhat under pressure of the Yellow Jackets... the climate tax on fuel.

A month before the European Parliament election, Europe played a prominent role in the speech. Macron seemed to punt the responsibility for tackling climate change over to the EU, proposing an EU carbon tax, a carbon price floor and “more ambitious green finance” policy at the EU level.
“The climate has to be at the heart of the national and the European project,” he said.
The Yellow Jackets protest movement was largely spurred by the introduction of a national carbon tax, which Macron revoked a month into the protests.https://www.politico.eu/article/emmanuel-macron-speech-yellow-jackets-response-tax-cuts-reform/

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I think the role of the EU should go no further than enabling and faciliating the EU members to take their own responsibility HOW to fulfill the Paris agreements and targets. Every country is different, has other national political sensitivities, and the only thing that counts imo is that we get enough CO2 reduction. With pooling experts between members, with coordinating envisioned actions from members for positive synergies, with possibly some investment funding to financially weaker countries, the EU already delivers a lot. Getting CO2 taxes on airplane fuel only possible if that is done EU-wide to avoid internal competition between airports and carriers... and to fight that off with non-EU big players in the world.

What Macron is doing is shifting actions he cannot easily agree with his own people to the EU. The convenient blame game shift for inconvenient actions at the expense of the EU to keep his own political ass safe.
If what he says is likely to be the opinion of most EU members, there would be no need to use the public newsmedia amplifier. And it is for me still questionable if the EU should force-feed that to members that have a different approach to reach the Paris targets.
IDK how Macron is looked upon in France (the most important opinion)... and how he is looked upon in other EU countries.
What I do know however is that he... not France... that he is not taken seriously anymore by Dutch politicians, diplomats, etc.
Also because he is seen as getting nowhere in France.... and that is also not good for the EU members.

Last edited: Apr 25, 2019

I live in a "museum" of agriculture and since 1956 in a continuous "EU crisis"."It is better to be a human being dissatisfied than a pig satisfied; better to be Socrates dissatisfied than a fool satisfied."

A lot of news currently ofc on the EU parliament election of May 23-26.
Here a list of posts from the Business Live feed of the Guardian on the Q1 2019 GDP and unemployment expectations for EU countries.
Unemployment at its lowest % since 2000, and for the EU-28 even lower than the booming years 2007-2008. Current rate 1% less per year.
What I understand is that special funds will be raised in the coming 5 year period to tackle the high unemployment rate in some regions in South Europe. Spain doing on its own already quite good.
It is not as strong as for example the US, not as spectactular as underdeveloped countries picking up... but all in all a fair perspective for the elections.
The only bad news is that it will strenghten the Euro somewhat.

Eurozone growth rate jumps to 0.4%
Boom! The eurozone grew by 0.4% in the first quarter of 2019.

That’s stronger than expected, and twice as fast as the 0.2% growth recorded in the final three months of 2018.

Ana Andrade, research analyst at The Economist Intelligence Unit, reckons the eurozone economy still needs support - so don’t expect the European Central Bank to raise interest rates anytime soon!

She writes:

At the ECB’s last meeting Mario Draghi showed that the bank’s toolkit could be adjusted to tackle a potential severe economic downturn. The ECB signalled it was ready to go “low for longer” or even further cut rates if the euro zone headed into a recession. If the flash estimate for Q1 is confirmed at 0.4% there should be no need for this.

Nevertheless, we continue to expect TLTROs [new cheap loans to banks] in very favourable terms and no hike this year as inflationary pressures remain low.

Finally, Spain continued to defy expectations growing at a rate of 0.7% quarter-on-quarter in line with its post Eurozone crisis average rate. The figure below shows that Spain’s GDP in level terms is now around 16% higher compared to the low it struck during the Eurozone crisis. This is the second best performance when compared to other peripheral economies, with sunny Cyprus managing to outperform others growing its economy by about 18%.

Does today’s data herald the beginning of a synchronised upswing in Eurozone GDP growth? It is probably too soon to tell with one quarter’s worth of data but Eurozone policymakers will be watching whether the momentum continues in the next few quarters.

“Eurozone GDP figures may have provided a positive surprise for investors, but its economy is far from out of the woods. In reality, growth is still pretty anaemic, and the Eurozone’s export-led economy remains vulnerable to any global slowdown. But things are looking up; Chinese stimulus should turn into a tail wind for the region, supporting positive trends in wage growth and employment.

Should economic growth run out of steam once more, rather than picking up speed, a fiscal intervention or further monetary policy changes may be deemed necessary.“

Italian GDP rose by 0.2% q-o-q in Q1, emerging from recession. This was the fastest GDP growth rate since Q4 2017. No GDP breakdown available (to be published on May 31).
Based on Istat info it seems that net exports contributed positively to GDP growth

A decent data for Italian GDP: +0.2% in Q1 after recession in H2. But:
1) Istat said that Domestic demand was a drag on growth for the third consecutive quarter,
2) Italy remains the laggard among the eurozone countries..

Italy escapes recession, but growth still weak
A rainbow shines over Rome’s skyline. Photograph: Gregorio Borgia/APIn another boost to the eurozone, Italy has returned to growth after its third recession in a decades.

Italian GDP expanded by 0.2% in the first three months of this year, Istat reports.

That follows a 0.1% contraction in both the third and fourth quarters of 2018.

This pick-up in growth will cheer spirits in Rome, where the anti-establishment government has been struggling to deliver tax and spending changes following its dispute with Brussels over this year’s budget.

But the long-term picture for Italy still isn’t great -- the economy is only 0.1% larger than a year ago, meaning it still looks like the sickest member of the EU.

Europe’s economy has been through some tough times recently, thanks to Brexit, the US-China trade war, political clashes between Italy and Brussels, and a downturn in Germany’s factory sector (particularly auto markets).

But today’s data suggests the eurozone will avoid being dragged into recession, as some feared.

Dan O’Brien, chief economist at the Institute of International and European Affairs, reckons the region is emerging from a soft patch.

BREAKING
1) Short thread on European economic data published at 10am.
Despite the year-old economic slowdown, unemployment across the EU continues to fall and is closing in on 6% - a new 21st century low. Eurozone close to record low.

2) Unemployment varies a lot across the EU, even if it is trending downwards everywhere. As of early 2019, Greek joblessness still highest at 18.5% and Czech lowest at 1.9%.
Usual reminder, 13 countries have a lower rate than Ireland, so less of the 'full employment' talk please.

3) 16 million people unemployed across the EU as of March, compared to 6m in US. Spain's has the highest in absolute terms, at 3.2m, and second highest rate among the EU28 (14%).
Rates and raw numbers here by country

4) Also out today are GDP data for the first quarter of 2019, and they are pretty good.
Growth in both EU and eurozone accelerated, after slowing quite a bit in the second half of 2018. That is looking more like a soft patch than a slide into recession, but too early to be sure.

Unemployment across the wider European Union has fallen to 6.4% -- the lowest since Eurostat started keeping data in January 2000.

The statistics body says that almost one and a half million people stopped being unemployed in the last year:

Eurostat estimates that 15.907 million men and women in the EU28, of whom 12.630 million in the euro area, were unemployed in March 2019. Compared with February 2019, the number of persons unemployed decreased by 172 000 in the EU28 and by 174 000 in the euro area.

Compared with March 2018, unemployment fell by 1.430 million in the EU28 and by 1.172 million in the euro area.

Eurozone unemployment hits 10-year lowIn another boost, unemployment across the eurozone has hit its lowest level in over a decade.

The eurozone jobless rate fell to 7.7% in March, Eurostat reports. That’s down from 7.8% in February, and the lowest recorded since the financial crisis in September 2008.

It’s still rather higher than in the UK (3.9%) or the US (3.8%), but much better than the double-digit jobless rates recorded during the euro debt crisis.

Theres are, as ever, sharp differences across Euope.

The lowest unemployment rates in March 2019 were recorded in Czechia (1.9%), Germany (3.2%) and the Netherlands (3.3%). The highest unemployment rates were observed in Greece (18.5% in January 2019), Spain (14.0%) and Italy (10.2%).

Bend, but not Break. Euro area real GDP up 0.4% QoQ in Q1, above expectations and much stronger than implied by PMIs.
We're 6 years into this uneven expansion cycle facing several headwinds and downside risks, yet much more resilient than before.

The eurozone economy rebounded in the first three months of the year, and more strongly than had been expected. GDP was up 0.4%, double the prior rate of growth, an annualized 1.5%. So back to where it was in the first half of 2018, but nowhere near its 2017 peak.

The EU grew by 0.5% in January-March, new figures from Eurostat show, up from 0.3% in the fourth quarter of 2018.

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Last edited: Apr 30, 2019

I live in a "museum" of agriculture and since 1956 in a continuous "EU crisis"."It is better to be a human being dissatisfied than a pig satisfied; better to be Socrates dissatisfied than a fool satisfied."